20686: Antoine Re: 20604: Esser: Steve Forbes on a fix for Haiti's woes (fwd)

[Bob Corbett <corbetre@webster.edu>]

From: Guy S. Antoine <webmaster@haitiforever.com>

> Steve Forbes on a fix for Haiti's woes
> Forbes - 29 Mar 2004

> How to Help Haiti Help Itself

> The U.S. should take several important steps to give Haiti a
> chance to break free from its history of tyranny, anarchy and
> perpetual poverty.

Curious... has Steve Forbes ever been to Haiti or are his
prescriptions for Haiti's economy just a rich man's fantasy?
Esser seems to think so, and I tend to agree with him on the
dollarization issue, but I admit that some of the other
proposals seem to make sense at least at some level.  Would
some economists on the list, would Alex Dupuy for instance
(or any other list member well-versed in economics tell me
what is right or wrong from the following points, on a
purely objective standpoint (that is, forget that Steve Forbes
proposed them).

> 1. Tell the IMF to get lost, immediately. No representative
> of that agency should be allowed near Port-au-Prince. The
> IMF has done immeasurable harm to developing countries
> around the world, and Haiti has been a particularly hard-hit
> victim.

> In the late 1980s and early 1990s Haiti's economy began to
> blossom. Foreign investment started flowing in. Textile
> factories and other businesses were opened. More and more
> people were getting decent-paying jobs (by Haitian standards),
> which enabled them to begin pulling themselves up the
> economic ladder. But the IMF plied its poisonous brew of
> budgetary austerity, higher taxes and debasement of the
> currency, particularly after Jean-Bertrand Aristide was
> restored to power in 1994. The economic boom collapsed;
> inflation ensued.

The first paragraph sounds like a socialist dream (from a capitalist,
nevertheless!)  But I am not quite sure how one tells the IMF to
get lost, while the military boots are pressing on your neck.  I
suspect that there is some revisionist economic history in the
second paragraph (decent-paying jobs), but there certainly were
more factory jobs than there are now.  Is the IMF responsible
for the loss of those jobs or was it the unwillingness of the
owners to accept union demands for better pay and working
conditions?  In any case, Steve Forbes thinks the IMF is
guilty.  That's a surprising statement from an  elite capitalist,
but I would appreciate some comments from some well-informed
persons on this topic.

> 2. We should tell Haiti's new interim government that past
> debts will be forgiven if basic economic reforms are put in place.

Another quite surprising statement!  It makes perfect sense to me,
however.  But what would be the exact conditions of that
"forgiveness"?  What would be the required "basic economic
package that would have to be put in place?  I guess the following
prescriptions do fill in the gap, but there is also a political issue:
what makes it imperative to tell the "new interim government"
when the debts were not judged forgivable before?  And what
happens after, if there is an after...?

> 3. Haiti should enact a flat income tax, somewhere in the range
> of 10% to 15%. The threshold for being liable for this levy
> should be set high enough to exclude most of the working
> population. A similar tax regime should be put in place for
> businesses. Haiti's economy would quickly flourish, and tax
> revenues would blossom.

Well, I did not think that the progressive nature of the tax was
the source of Haiti's economic problems.  I thought is was the
non-collection from the rich, for the most part.  Now, exactly
how would the flat tax (which I assumed to already be flatter
than the U.S.'s anyhow -- I could be wrong) going to improve
tax collection (revenues will blossom) and cause the economy
to "quickly flourish"?  I did not think that economics was quite
that easy, but I am willing to change my expectations.

There are 3 more prescriptions from Steve Forbes.  I will address
them in a different message, if only to ask some questions.  I have
to say that Steve Forbes gives one almost a cozy feeling, but I
would prefer to keep his family history or even his personal
track record out of the discussion, just so I can rationally sort
out what is good in his message and what makes no sense at all
for Haiti.  We all can have our say, of course, but would some
economists step up to the plate?


Later for the rest,

Guy S. Antoine
Windows on Haiti
http://haitiforever.com